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Saturday, July 13, 2024

Borrowing just to pay off debt

By Trinh Duy Viet

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The State Bank of Vietnam (SBV) has issued Circular 06/2023/TT-NHNN allowing clients to borrow from one bank to pay debt owed to another bank. This circular is believed to have significant impact on lending rates, competition among banks and their market share. Banks launch low-interest loans packages Circular 06/2023/TT-NHNN on lending operations of local banks and foreign bank branches came into force on September 1, enabling clients to borrow money at one institution to pay off debt at another institution. This means clients can look for other banks offering a lower interest rate to borrow to finance their debt payments to their current lenders. State-run banks have embarked on a race to offer such loans. Specifically, the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has launched a preferential loan package with the annual interest rate set at 6.9% for the first six months, 7.5% for the first 12 months or 8% for the first two years. After the chosen period, Vietcombank will switch to a floating interest rate, currently around 10.5%. The Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) has introduced a similar credit package with a yearly interest rate of 6% for […]
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